This is the first article in a three-part series examining the ways stakeholders — including state policymakers, school districts, and electric utilities — can build on recent federal actions to accelerate the equitable transition to electric school buses across the U.S.
The recent enactment of the bipartisan Infrastructure Investment and Jobs Act in the United States is an important step on the path to cleaner school bus rides for the more than 20 million children who rely on an iconic yellow bus every day and a chance for states to follow with bold action.
The new law makes an unprecedented investment in electric school buses (ESBs), appropriating $2.5 billion to help school districts adopt zero-emission school buses, such as ESBs, and another $2.5 billion toward zero- and low-emission school buses — which includes both ESBs and alternative fuel vehicles.
Under the new Clean School Bus Program, to run between 2022 and 2026, the U.S Environmental Protection Agency (EPA) will cover up to 100% of the costs of replacing existing school buses, including vehicles and charging or fueling infrastructure. It’s critical that the EPA use the flexibility provided by Congress to prioritize electric school buses over alternative fuel vehicles under the second portion of the program.
The Clean School Bus Program offers a bold new effort to begin phasing out diesel school buses which account for 95% of the U.S. fleet. Diesel school buses contribute to climate change and expose children, drivers and the surrounding community to unhealthy levels of air pollution, with impacts on health and learning.
Moreover, traditionally underserved communities — including communities of color and low-income communities — are more likely to rely on school buses for transporting their children to school and to suffer from vehicle-based air pollution. And according to one analysis, federal investment through the Clean School Bus Program could also provide major economic benefits, including creating approximately 46,000 job-years.
Although the Clean School Bus Program is the largest amount of funding ever established to electrify school buses, this investment is still not enough to transition the entire fleet of 480,000 school buses to electric vehicles — especially when each electric bus currently costs school districts more than three times their diesel counterparts. States will play a critical role in bridging the current upfront cost gap.
A Critical Time for All States to Act
The year ahead presents a unique opportunity for states to focus on equitable school bus electrification. Federal grant programs often reward applicants that leverage other funding. This makes 2022 the perfect time for states to invest their own resources in electric school buses by providing incentives, financing, technical assistance and regulatory support.
The good news, outlined in a previous WRI article, is that many school districts are already working to electrify their school buses, and as of August 2021 33 states have at least one ESB announced, procured, delivered or in operation. Now, it’s time for all U.S. states to get onboard and move to scale.
How States Can Bring the Benefits of Electric School Buses to Their Communities
Here are five specific ways that state leaders can position their school districts for a successful, equitable transition to electric school buses:
1. Set Ambitious Goals and Build a Supportive Policy Environment
Policymakers should consider how electric school buses fit within a state’s broader transportation electrification goals. On the regulatory and legislative fronts, states can set targets that help propel the market forward.
State policymakers should move immediately to adopt California’s Advanced Clean Trucks rule (ACT), which includes school buses. The ACT sets increasing zero-emission vehicle sales requirements for medium- and heavy-duty vehicle (MHDV) manufacturers beginning in 2024. Massachusetts, New Jersey, New York, Oregon and Washington adopted the rule in 2021, and more states are considering adoption in 2022.
State adoption of the ACT will bring cleaner air to impacted communities while bringing zero-emission trucks and buses to scale. Adopting the ACT is an important first step to codifying the goals of a memorandum-of-understanding signed by 16 states and the District of Columbia.
This agreement established a shared goal of cleaning up MHDV fleets, including school buses, by reaching 30% zero-emission MHDV sales by 2030 and 100% zero-emission MHDV sales by 2050. In addition to these efforts on new sale requirements, state leaders should review procurement laws and other state regulations and modify them as needed to bolster ESB deployment.
Within these broader transportation electrification efforts, school buses offer a promising ground and a place to move more quickly, as over 90% of school bus routes can be served with today’s electrification technology. ESB deployment can be a catalyst for broader MHDV electrification and a down payment towards cleaning up the entire sector.
Recognizing this potential, Governor Kathy Hochul recently announced a nation-leading proposal for New York, aiming to achieve the electrification of the state’s entire school bus fleet by 2035. If enacted, it would represent the first statewide transition plan to achieve a 100% ESB fleet in the country.
2. Provide Dedicated Upfront Funding
States have already awarded over $480 million in funding for electric school buses and infrastructure, including approximately $180 million in 28 states through Volkswagen (VW) settlement funds. These VW settlement funds make up over one third of state public funding for electric school buses allocated to date and are the primary source of state funding for ESBs in most states. In 2021, updates to state spending plans for VW settlement funds allocated significant amounts to ESBs, including $33.6 million in Illinois, up to $27.2 million in North Carolina, $20 million in Virginia and $13 million in New Jersey.
However, VW settlement funds are a one-time funding source that many states have already exhausted or will soon deplete. Additional new sources of funding are needed to support school districts and school transportation providers to cover the cost of new ESBs while the market continues to mature and until total cost of ownership parity is achieved.
Supportive financing options, including through state green banks, are also critical parts of the funding and financing landscape that can help school districts leverage the lower operational and maintenance costs of ESBs. Funding and financing options for school districts will be further discussed in an upcoming WRI article.States should dedicate a significant amount of funding to electric school buses, with at least 40% of this funding supporting ESB deployment in traditionally underserved communities (such as low-income communities, communities of color, Indigenous communities, and communities facing disproportionate air pollution).
California currently offers the most robust state funding for ESBs through its Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program. The state is allocating $130 million exclusively for electric school buses in 2022.
States should put in place generous incentives now to increase uptake and phase them out over the next few years as the market matures, production increases and prices decline. For example, Colorado Governor Jared Polis recently proposed a new six-year $150 million program for school bus electrification. The budget proposal, if approved, would secure the full funding amount this year, which would allow for effective long-term planning and program design. If the full funding amount is appropriated this legislative session, it would allow for the possibility that the incentives could be front-loaded to build increased demand and drive uptake, and then phase down the incentives gradually. Starting out with more generous funding levels that gradually phase down also sends a signal to school districts that it’s fiscally prudent to start electrifying their fleets immediately.
3. Incorporate Technical Assistance and Workforce Development Strategies
States should also provide technical assistance to school districts as they manage the transition of their fleets. School districts are navigating an unprecedented pandemic and managing the educational needs of their students during a challenging time — they will need guidance with this new transportation option and its complexities. States are well-positioned to step in and offer that guidance to school district staff and should incorporate technical assistance and proactive engagement to ensure program success.
New York recently launched a new Green Schools Initiative to assist schools on clean energy and energy efficiency initiatives with a focus on disadvantaged communities. Administered by the New York State Energy Research and Development Authority, this is a promising model that should also be applied to transportation electrification. Technical assistance should focus on both the nuts and bolts of implementation as well as assistance accessing all available funding sources.
Supporting school district staff and drivers must also be part of this technical assistance. The California Energy Commission’s Clean Transportation Program invests directly in workforce development and training entities to expand their current services and develop new programming specifically tailored to zero-emission vehicles.
States need to consider how best to prepare their workforce to thrive as the electric school bus industry continues to evolve including supporting programs at community colleges and investing in historically underserved communities.
4. Ensure Electric Utility Programs Adequately and Equitably Invest in Charging Infrastructure
State public utility commissions which regulate investor-owned electric distribution utilities have a key role to play in supporting ESB adoption and ensuring a fair and cost-effective transition. This includes oversight of utility rates, transportation electrification planning, and authorization of make-ready infrastructure programs for ESBs.
State regulators should use these authorities to support school bus electrification. Transitioning to electric school buses has the potential to provide benefits to the grid, in addition to reducing harmful emissions from diesel buses.
Some utility programs may view ESBs as grid assets offering the potential for load management to avoid high-cost system peaks and to better allow for the integration of renewable energy generation. These programs may allow ESBs to be used as distributed energy resources or managed load assets. When establishing utility electric school bus programs, regulators should consider best practices for rate design that limit increased costs and maximize equitable outcomes.
Public utilities commissions can explore these topics through open dockets and technical workshops. These proceedings may evaluate rate structures and equity considerations when electrifying MHDVs, potential emissions benefits, and promising use cases for Vehicle Grid Integration.
One example is the Illinois Commerce Commission, which is assessing transportation electrification opportunities through a series of open workshops as directed under the Climate and Equity Jobs Act.
5. Incorporate Equity into All Aspects of ESB Program Design and Implementation
It is essential that all the above approaches place equity and environmental justice at the forefront. ESBs represent an opportunity to address the disproportionate burden of pollution experienced by people in traditionally underserved communities across the U.S.
Equity should be incorporated into all facets of state ESB policy, programs and outcomes, including procedural equity that centers community input into program design, as well as distributional equity that ensures that disproportionately impacted communities and students in underserved districts receive sufficient funding and technical assistance.
One state that is leading the way on this front is New Jersey. The State Senate just passed legislation that would bolster and expand electric school bus grants administered by the Department of Environmental Protection. At least half of the grants would be awarded to school districts serving low-income or environmental justice communities.
Examples of Recent State Legislative Activity on Electric School Buses
Governors and state legislatures across the country are prioritizing electric school buses and in 2021, bills involving electric school buses were introduced in at least 11 states. Four of these bills were passed and signed into law. In the table below we share examples that illustrate a range of state legislative approaches.
Illustrative Examples of State Legislation on Electric School Buses
| Policy approach | Description | Example 2021 Legislation |
|---|---|---|
| State-administered ESB program | Establishes state grant or voucher programs administered by a state agency. May be a separate electric school bus program or integrated into existing program. | S4077 New Jersey; HB 2118 Virginia |
| Utility ESB investment program | Establishes programs within state public utility commissions authorizing investor-owned utility programs. Key decision points include determining which expenses are eligible to be rate-based. If Vehicle Grid Integration is a component of the program, these proposals may specify whether the utility or school district owns the bus and/or battery. | HB 832 Maryland; SB 1380 Virginia |
| Broader utility electrification transportation planning | Incorporates ESBs into broader utility electrification planning proposals, which may in turn be included as part of larger climate, clean energy, and transportation bills. These bills typically require utilities to submit transportation electrification investment plans and may also require public utility commissions to study or recommend best practices for rate design and use cases. | SB 21-260 Colorado; SB 448 Nevada; Public Act 102-0662 Illinois |
| Sales tax, loan terms, and tax exemptions | Lowers the financial cost of ESBs by exempting school districts from certain costs associated with ESBs, including sales tax on a purchased bus or use tax on transportation fuel. These modifications may be made through amendments to existing education statutes or state education aid reimbursements. | S5268 New York; HB 2184 Oregon |
| Public fleet electrification | Requires public fleets within a state to electrify. May be targeted only at school districts or include all public fleets including transit and state government fleets. | LD 1579 Maine; S.2255 Massachusetts |
| Green schools | May address multiple elements of reducing energy usage at public schools, including installing renewable energy, building energy efficiency upgrades, and school bus electrification. | H942 North Carolina; HB 4120 Texas |
Note: Bolded text indicates bills that have been passed and enacted into law.
With a wide range of electric school bus policy and program options available, and a unique opportunity to leverage an historic federal investment, states have an unprecedented window in 2022 to accelerate an equitable transition to electric school buses. Now is the time for states to create new jobs, combat climate change and deliver cleaner commutes for kids.
